Incorporating an endowment into an estate plan allows Michigan residents to lend financial support to cherished foundations beyond the planner’s own lifetime. Estate planning strategies typically include establishing specific conditions to preserve assets, regulate distribution and prevent inappropriate spending. A recent dispute involving a Michigan church demonstrates the role a detailed estate plan can play in protecting beneficiaries.
A Muskegon County judge upheld a school’s legal claim to a $165,000 endowment from a deceased donor. Reports indicate the school’s previous affiliation to a local church had been severed, leading the church to seek ownership of the funds. The donation was apparently intended to support Christian education through measures such as scholarships.
According to reports, the Muskegon church could legally take ownership of the funds if the school shut down. The church was accused of misleading the foundation managing the funds into believing that the school had closed, but the school was actually still operating outside of the church’s governance.
Two of the donor’s relatives, who are also trustees for the estate, presumably represented the school’s interest in court out of respect for the donor’s original terms. The church’s attempt to have the case thrown out for illegitimate claims was overruled. Sources say the church was previously instructed to release the funds to the foundation until a resolution was reached, but on Feb. 15, the complaint was officially validated and the donation was awarded back to the school.
Despite the donor’s potential allegiance to both the church and the school, providing a clear outline of the terms helped to safeguard the educational funding from church officials. While specific trustees or foundations may be held in high regard, setting up solid legal limitations ensures that all parties adhere to the donor’s wishes. Anyone contemplating such an estate plan needs to be aware of the possible legal avenues for his or her goals..
Source: mlive.com, “Judge rules that Calvary Christian Schools can keep donation that Calvary Church had tried to take, attorney says,” Lynn Moore, Feb. 17, 2013